[quote=pri_dk][quote=CA renter]The SS fund is worse shape than most public pension plans. Public sector workers will end up having to pay to “prop up” SS as well, even though they do not receive SS benefits.[/quote]
Completely unsubstantiated.[/quote]
“According to the US Census Bureau, there were approximately 117.2 million households in the United States in 2009 (US Census Bureau, Table AVG1). The NPV of Social Security’s unfunded liability over the next 75 years is $5.3 trillion, or approximately $45,000 per household (2009 Social Security Trustees Report, p. 61). The NPV of the unfunded liability over the infinite time horizon is $15.1 trillion, or approximately $129,000 per household (id. at 62).
“The unfunded liability for the major
pension plans sponsored by the fifty U.S. state governments is approximately $3 trillion using Treasury discount rates, contrary to government accounting,
which would point to unfunded liabilities of only $1 trillion.”
If taxpayers are to bail out either system (both are government-backed retirement benefits), the burden on a per-capita basis is clearly higher for Social Security than for public pension plans, even if you use the higher amount (Treasury discount rates) for the unfunded liabilities of public pension plans.
…………….
Dean Baker did some research into the pension “crisis” (tables with unfunded liabilities included). It’s important to note why these “unfunded liabilities” exist in the first place. I would add to his list: “pension holidays,” when public employers paid NOTHING toward their employees’ pensions.
“The shortfalls facing most state and local pension funds have been seriously misrepresented in
public debates. The major cause of these shortfalls has not been inadequate contributions by state
governments, but rather the plunge in the stock market following the collapse of the housing
bubble. Given the low PE ratios in the stock market, pension fund assumptions on the future rate of
return on their assets are consistent with most projections of economic growth and past experience.
Furthermore, when expressed relative to the size of their economies, most states are facing shortfalls
that appear easily manageable.”
…………
“While state and local government pensions should be funded at levels that allow them to weather
the impact of cyclical downturns, it is important to recognize that the current downturn is by far the
longest and deepest of the post-war period. The managers of these funds obviously failed to
recognize the housing bubble and the dangers it posed to the economy, but this was true of the vast
majority of economic and business analysts at the time. Certainly state and local pension funds were
not well served by the professional managers who advised them. It might be reasonable to ask why
financial experts, who were often highly compensated for their services, failed to see such an
obvious threat to the economy and the stock market as the collapse of a housing bubble.2 However,
this is an issue of the failings of the financial industry, not the failings of state and local
governments, except insofar as they exercised poor judgment in buying the industry’s services.”
